Why did the Fortescue (ASX:FMG) share price outperform its sector today?

Why did Fortescue shares have a decent day today?

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The S&P/ASX 200 Index (ASX: XJO) has actually finished up in the green this Monday, after spending most of the day scaring investors with red ink. The ASX 200 ended up at 7,245 points at market close today, up 0.05%. The Fortescue Metals Group Limited (ASX: FMG) share price did a little better though.

Fortescue shares closed the trading day at $17.15 each, up 0.3%. But that was a pretty decent showing for Fortescue. Why? Because most of its iron ore mining peers fared far worse.

BHP Group Ltd (ASX: BHP), for example, ended up finishing up the trading day down a nasty 1.6% at $39.59 a share. Rio Tinto Limited (ASX: RIO) travelled even worse. Its last trade was at $93.82 a share, down 1.78%.

So why did Fortescue come out on top in a sector that seemed to be targeted for a selloff today?

Fortescue shares defy the share market

Well, one possible cause could be the iron ore price itself. According to Business Insider, iron ore has been on an upward trajectory for the past week. At the start of December, iron ore was being priced at roughly US$95 a tonne. Today, it is commanding US$101.50 a tonne.

But why would that benefit Fortescue and not the other major iron ore miners like BHP and Rio?

Well, Fortescue, unlike its two rivals, is more of a ‘pure’ iron ore miner than the others, despite its recent moves into the hydrogen space.

BHP has extensive operations in oil, coal and copper. Likewise, Rio also is in the business of extracting aluminium, titanium, copper and diamonds.

As such, one could argue that a higher iron ore price benefits Fortescue to a greater degree than the other more diversified ASX 200 miners like BHP and Rio. That might be why we saw the smaller pure-play iron ore miner Champion Iron Ltd (ASX: CIA) also rise today (up 0.45% a $4.43 a share).

Of course, this means Fortescue (and Champion Iron by extention) could be more exposed than the others if the iron ore price falls. But fortunately for investors, that isn’t the case today.

At the current Fortescue share price, this ASX 200 miner has a market capitalisation of $52.8 billion, with a trailing dividend yield of 20.87%

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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